« Unlived life | Main | Daedalus Links »

Jan 03, 2006



In the distant future not only do I see the need for regulators but the emergence of a virtual central bank from which all virtual currency is printed and backed with real world money. The bank will actually handle all transactions and particular games will just authorize them. Item creation may even need to go through the bank and companies will have to buy the right to drop something with money from their virtual account.

The only way I see to avoid a future similar to this are games without any ability for player-to-player transactions. As long as that ability exists the lines between the virtual and real world will be too blurry, and the tie between virtual and real world assets too strong for issues of liability not to become more prevalent.


This is an interesting development. Smaller in initial scale than say the SWG NGE, but potentially with more far-reaching repercussions.

As past discussions here have shown I'm not one to easily jump on the bandwagon of people having ownership rights over digital creations in someone else's world. OTOH, this P2P change and LL's reaction to the users' reaction (including "compensation"!) could be a bellwether. It's too soon to say, but this is an interesting and disquieting case for all the reasons you mention, Ren.

Whether SL users truly own their creations or not, it's difficult to say that they don't have an expectation of value for some of them (e.g. "land") when the world developer sold these objects on that basis.

OTOH, is this really any different from saying "Linden Labs nerfed TeleHubs"? When in other games significant in-world assets (oh, say, Jedi) get nerfed, people are upset and may vote with their feet, but there's no realistic expectation of compensation in fungible form (whether real dollars or in-game currency). The primary difference I can think of here is that LL appears to have sold -- in essence, for real dollars -- in-world land with a higher valuation based on information LL knew to be erroneous. As Ren says, that seems to at least open the door for real legal liability, as it would with any other product or service.

I don't know if this will be the case that changes the liability picture on online worlds, or if such would apply anywhere but user-constructed/pseudo-owned worlds like SL. But at the very least it highlights how gray the role of developer/operator/creator becomes in such a world.


I've been waving my hands and screaming this from the mountaintops for years now: When a developer acknowledges real world monetary value for in-game holdings, it opens itself up to the possibility of horrific liability problems. The reasons are perfectly illustrated in the above example. Unless you indemnify yourself in some fashion against these sorts of suits, ANYTHING YOU DO which changes the value of said holdings can result in damage lawsuits. You can very easily lose the ability to improve your game as you see fit.

I like LL. I respect what they're doing, and I'm hoping they have some kind of loophole established to get themselves out of this tangle, but I haven't examined their terms carefully enough to determine whether they do or not.

This is one of those times when I'm not at all happy about having my assertions validated.


Unless you indemnify yourself in some fashion against these sorts of suits, ANYTHING YOU DO which changes the value of said holdings can result in damage lawsuits.

Well, the Second Life Terms of Service are pretty clear:

(Latter emphasis added.) There's also this:
7.3 Changes. Linden has the right at any time for any reason or no reason to change and/or eliminate any aspect(s) of the Service as it sees fit in its sole discretion.
Section 6 on items and currency and Section 11 on indemnification are also worth reading. It looks to me like Linden Labs has protected itself about as well as it could... and yet. The fact that they sold in-game content (locations) based on information they knew to be incorrect could conceivably trump all this. Or not. Sadly we won't know until the lawyers sharpen their knives.


Thanks, Mike! It looks to me like that says exactly what it should say. They covered their arses appropriately.

These kinds of cases are almost always settled out of court, so we may never get a clear ruling on this one. If it makes it to court, it'll be an important case for us to watch.

"The fact that they sold in-game content (locations) based on information they knew to be incorrect could conceivably trump all this."

I prefer not to say "sold in-game content." That's misleading. What they're really selling is a right to use some of their company resources in a certain way. It is really more like buying space to put up a webpage at an ISP than it is like buying "content."

Anyway, it is not necessarily true that the locations were sold based on information LL knew to be incorrect, at the time. It's entirely possible that they were sold in good faith. The decision to change the teleport code may have been made after the sales.


Problem is, there's a disconnect between the TOS and the way things actually are and appear to be run. Yes, Linden Lab is covering their rear in the above-mentioned TOS clauses...but then they put a lot of "Make real money!" in their advertising copy, and do stuff like offer this land buyback.

Another brief note: assuming she's refering to goings-on before the p2p implimentation was anounced, katykiwi Moonflower apparently didn't know that the p2p teleporting code supposedly existed since Beta and was already in use by those with Linden powers (and it was possible to end up p2p onto a private island sim that had no telehub access set up, I noticed once.) Judging by the lack of time between feature anouncement and deployment, they probably only had to flip a few bits to enable it. Why a telehub sim went up for auction *after* the anouncement is a bit beyond me, however...

It's possible that telehub land was allready overvalued, however: in the Great Forum P2P Debate, Robin Linden posted the results of an analysis, preformed that month (December) and the previous month, for "sales made in regions near a telehub" and in those not. They seemed to show that telehubs hardly made a difference (although I don't think two months worth of data was enough to be conclusive).


I sincerely hope that all parties involved (all seemingly with lots of money and time on their hands) take this through the court system and see it to the end. Although it will be at great expense, this really needs to be decided by the courts.

A Tale In The Desert and SL are the precursors for the future of VWs. Never again will we see such boldness from developers, and only through their example (and outcome) will others dare to tred. Consider the impact UO and M59 had on MMOs. To this day all draw on their experience as a guide on what (not) to do, because they were the brave few who led MUDs out of the dark and into the mainstream. No one (with significant funding) breaks from the traditions now established.

10 years from now there will be no one willing to finance a VW that does not heed the lessons learned today. It may take that long for a legal resolution, but any resolution will serve a critical role in the future of VWs.

Good luck to both sides, please see it through to the end instead of settling.


The only problem I can see from this is someone will sue LL and could win. Then LL will shutdown Second Life and then where will those people be? SL isn't a user ran server its all ran by Lindens which means if they go down the servers will go down? Someone who appearently makes a living in SL wouldn't want this. No more Second Life means no more money. Oh well hope they realize this before they bite the hand that feeds them. And if Second Life does become a user ran server you know people will run some for free and just hand out $L like candy making it worthless.


Elle Pollack >Problem is, there's a disconnect between the TOS and the way things actually are and appear to be run. Yes, Linden Lab is covering their rear in the above-mentioned TOS clauses...but then they put a lot of "Make real money!" in their advertising copy, and do stuff like offer this land buyback.

Perhaps, but the two topics are not mutually exclusive. It can be a matter of the land purchaser making incorrect assumptions regarding the representation of "land" within the environment.

The in-game sale of land should be purchased with the knowledge of its transitory nature, and valued as such. Land adjacent to a telehub has value at the time of purchase due to the location of a telehub, but the nature of the "world" is that this may not always be the case, as the TOS suggests. The buyer is a land speculator that should be aware that the land might be rather volatile.

A particular commercial property may be valued highly because of an adjacent public transportation route. The route's path is changed. The property owner should go into the transaction aware that the value of the property was tied to a service that would not be under his control. Granted, in this case, the seller of the property was the Transit Authority, which may have known about the potential changes in the route at the time of sale... but were they certain changes, or changes under review? (see below) And did the transit authority forewarn the property owner that changes could be made without notice (see the EULA)?

Now, regarding the issue of the developers selling land "adjacent to telehubs" while concurrently developing new technology that would make this land less valuable:

  • many pet projects can be under development for some time before being scrapped. There's no guarantee that a feature under review, even one that's been announced, will ever make it to the live servers.

  • any cessation of selling such parcels of land, or changes in the process of selling such parcels, would lead to speculation and behavior that could also damage the valuation of such land, possibly for no reason, should the element be scrapped

  • assuming that the land being sold is in new areas, and not just a more densely-packed set of telehubs, the new land zones would suffer devaluation if there were not a hub within a reasonable distance

These points would suggest that the developers had no reasonable course of action other than to continue "business as usual" in the sale of telehubs while the "teleport anywhere" feature was under planning, development, and testing, and should only have altered its practice after the final decision was made that such technology would be released.


Mike Sellers > Well, the Second Life Terms of Service are pretty clear:,,,

I’m not making my point clear enough, in my text was buried this:

    “I think Second Life might be the first, will gain a status such that they will start to accrue moral and legal duties that they will not be able to contract out of.” emphasis added.

I don’t like anologies in these discussions and I’m sure I’ll regret this, but: consider the type of thought processes that go one when thinking about speech rights malls and company towns.

Then don’t apply company town case law to Second Life, but rather think of the idea of values and duties and the limits of contract law. I think one has also to take into account the way that Second Life is marketed, the practices that occur within in it and the degree to which Linden approve of or at least don’t disapprove of these.

As other have noted and I suggested in the initial post, I think that a Civil space is something that probably does fall outside the current commercial model, but that’s fine, lots of things do, not all things are commodities.

But I think we need to talk this step by step, hence I posited the notion of how a commercial entity (in this case Linden, but I’m more interested in the general case) should operate with something like a market that it creates and acts in – should things be left as they are and we should think of the market as really the macro market of all possible virtual worlds, or should we look to different models for markets within given virtual spaces of now?


Yeah Ren, agreed with possibly not being able contract themselves out of this. Quoting myself:

It looks to me like Linden Labs has protected itself about as well as it could... and yet. The fact that they sold in-game content (locations) based on information they knew to be incorrect could conceivably trump all this. Or not. Sadly we won't know until the lawyers sharpen their knives.
[Should have said, "they appear to have sold..." etc. I don't know this for a fact.]

This gray area is, as you suggest, the cusp between wholly commercial and wholly civil spaces. What we have here is a commercial space selling a civil experience -- SL likes to style itself as a "nation" for example, rather than, say, as a large shopping mall. When the two collide, there are bound to be points of friction. This has happened before in online worlds; we're just seeing the next (and more clearly drawn) iteration of this now, another step toward understanding what "civil spaces" really will be.


Mike> "What we have here is a commercial space selling a civil experience"

That's the phrase I was looking for, that's exactly it, Linden are selling not a social but (what at least looks like) a civil experience, and that next step is critical.


If LL styles itself as a nation, this is an issue of sovereignty. Governments have certain rights with respect to land and its values, and it seems like Linden is asserting rights like that in its TOS. The likely legal outcome is the shopping mall, though, a place that's not sovereign but has near-sovereign rights and duties under the laws of a sovereign state. And I'm fairly sure that among those rights and duties will be a requirement that if you want to avoid real-world taxation and regulation, you cannot allow the free liquidity of your in-world currency for out-world money.


And by the way, I am kind of shocked at this. Point to point travel will have a dramatic effect on the entire economy. With unconstrained travel, the location of a resource has no effect on price. Only the direct amenity of the resource affects its value. Relative to a world in which movement is costly, that's an earthquake.


I see this as a natural complication of the peculiar capacities of sovereignity in virtual worlds, just as Ted does. Namely, that a virtual world sovereign (whether the sovereignity is vested in a developer-autocrat or in a self-governing population) can alter not just social laws but the physical laws of the universe itself. That's the one thing we don't really have a precedent for in the context of the real world. Sure, sovereigns (and private institutions) in the modern world can significantly alter the material world, even its biology, in various deliberate and accidental ways. But in a synthetic world, sovereigns can fundamentally alter the biological, social and physical nature of the world. The problem this creates with economies is profound, as virtually all sources of differential value or uneven accumulation rest on arbitraging some sovereign's configuration of either the material or social world. Change those configurations and you can instantly dispossess the wealthy.

Synthetic worlds can be, if they so choose, radically egalitarian. In a way, I think they are a fairly good test bed for demonstrating that radically egalitarian societies would be anything but utopian. But if they are to have inequalities, of what sort should those be? It seems to me one of the answers is, "Historically derived", e.g., that inequality should be accumulative and based on the successive and persistent impact of the design history of the game. Now it also seems there should be some countervailing pressure to ameliorate the impact of that accumulative inequality, some drain that prevents it from being so overwhelmingly accumulative that no one who was not well-situated with respect to the initial configuration of the gameworld could ever meaningfully assert their own rights and capacities within the gameworld, or gain a significant share of resources. But that's just my sense of what makes for the maximally "interesting" or "fun" synthetic world.

However, when the sovereign makes a move like this one--altering some deeply historical structure that has created accumulative inequality, that goes back to the initial condition of the gameworld, effectively trying to undo all the emergent social patterns that depend upon that history, they're effectively revealing that inequality or differentiation in the gameworld depends on some far more arbitrary and unsettling whim--unless they articulate a new and fixed principle around which value and accumulation will be based. Most human beings dislike social worlds that depend on autocratic whim, on the seemingly random or novel momentary impulse of a sovereign.

If you're going to do something this fundamental, and something that strikes deeply at the emergent structures of synthetic society, that undoes history, it seems to me that you have to engage in a different process than what developers are accustomed to: you have to be transparent, you have to be consultative, you have to slowly prepare the ground, and you have to be persuasive about the importance or necessity of the change. Being persuasive means you open up the possibility of being persuaded, e.g., that the change you contemplate might potentially demonstrated to be a bad idea. You have to follow the same formal procedure involved in rezoning a real-world community, only even more so. After the fact compensatory strategies don't cut it.


I'll refrain from commenting on the legal/governance issues (alas, time is scarce), but I came across an interesting tidbit to add to the mix. Perhaps an economist could explain this more coherently, but it would seem that the compensation to the land owners may simply be a transfer in value from holders of Linden Dollars (by devaluing the currency through printing more of it). I'm not sure what this means in terms of precedent for (RL) compensation, but I'll leave it here for others with greater insight to chew on:

Aaron Levy: Is Linden Labs going to create the L$ to buy back the land or will Linden Lab actually buy the L$ from their own exchange for these transactions?
Robin Linden: We will create the L$. We anticipate the actual amount that goes into the economy will be fairly small relative to other sources, such as weekly stipends. [from SLOG economic update]


Seems to me that Linden is really trying to have things both ways. They want the appearance of empowering the user, but the reality is that they are, like all virtual world operators, autocrats who can and will do whatever they choose to do, and who will not treat the world as theirs only when it is convenient to do so.

That they are just transfering value from holders of Linden dollars to the land holders underscores this point: Linden isn't willing to compensate the users at any actual cost to themselves and they can simply dictate that other users will be paying the cost, not them.

Is this where idealism meets the cold reality that Mike Sellers and I are always bringing up? Linden, as much as it might like to, probably can't afford to set a trend whereby they'd have to lay out actual cash to compensate users for decisions by Linden that have compromised user value.



Regarding the devaluation of the currency in order to pay to compensate the landowners: it isn't so simple as just transferring wealth from the other players to the compensated land-owners. As a result of the new transport-anywhere system, it seems to me that the total value of all goods in the world decreased as well.
The value of the property that was once near the teleporters has decreased in an absolute way: there is now less wealth in Second Life, period. Devaluing the currency seems to be a way to distribute this loss of wealth among the entire economy rather than placing it purely in the hands of the landowners affected.


One concept that seems to be missing from this discussion so far is that one of the original purposes of the telehubs as I understand it was to require players to pass by and be exposed to locations that they would not otherwise visit. This faciliated a certain amount of serendipitous interaction with players of different interests and viewpoints, avoiding Sunstein's republic.com scenario of echo chambers and deliberative enclaves where like-minded persons merely reinforce and amplify each other's points. Point to point transport greatly reduces the opportunities for serendipitous encounters, as well as for effective public protests. Maybe that is what the Lindens wish to accomplish?


If Linden were a state or local government in the United States, the owners of telehub land might bring a regulatory takings claim against it. The theory would be that Linden's actions amounted to a de facto elimination of the use that made ownership of the land valuable, so that Linden would owe just compensation to the landowners. Under current U.S. law, the landowners would probably lose (1) because Linden didn't prevent them from doing anything, and (2) because they remained free to use that land in other valuable ways. Having said that, the case is surprisingly close; it's not something that would be laughed out of court.


I would have thought regulatory taking would be much more restrained to the negative consequences of government action (eg. compensation when you build an airport next to someone's house, or rezone their hotel into agricultural land). Are there cases in the US where the indirect benefits of government undertakings (eg. increased business near a subway station) are an actionable right of property? Could you sue the government if they stopped running/diverted the highway/subway line that brought customers to your store? Pretty much every decision a government makes would affect people/businesses in one way or another - how would you set any limits?


To misquote "Cool Hand Luke:"

"What we have here, is a failure to remunerate."

Or not, I think.

Because we keep using real-life (RL) terms like "buy," "sell" and "own" for both land use and the use of objects, animations, skins, etc., inside SL, we keep getting confused. I've read the TOS for SL very thoroughly a couple times, being interested in doing some business there. Here's the short version: Linden owns SL. Period.

I don't mean to sound grumpy; I'm not. The Linden folks are doing, IMHO, a great job. It's a fantastically risky enterprise they've undertaken, and one fraught with potential legal liabilities, some of which are now rearing their wee teleported heads. But, legally, SL is a game.

It is a an entertainment venue and you pay money to participate. You can pay more money to participate in more (to you) interesting or immersive ways. Same as in many other media, the better "seats" cost more money. In football, you pay more to sit on the 50-yard line, up front. In SL, you pay more for bigger tracts of land, nice skins and cool goth hair.

SL is different in that the owners are allowing the players the ability to put on shows for each other within the venue and charge for the content. That is all.

"Hey! I warmed up this seat! Give me a buck, and I'll let you sit here!"

"For $2 I'll go get you a beer."

"Box seats for the whole season are too expensive, so we'll rent them out one game at a time!"

You get the picture. It's an entertainment where many members of the audience also get to be the players.

But the owners of the venue are still the owners. End of story. They own the servers, they own the software, they own the copyrights.

Linden has granted (and maybe not even that... see 5.3.iii of the TOS) some limited intellectual propery rights to content created in SL. Which is fantastic. Hugely big. Major good and great. But it mostly means that you can (maybe; 5.3.iii) do some things with what you've created for SL in the outside world and they won't sue you, and that you can use the stuff inside SL to make money for yourself, which is the whole basis of the SL economy, so there you go.

But issues like land? And taxes? [I'm, frankly, incredbily surprised that there isn't a tiny little sales tax in SL] Communications? Standards of decency? Public vs. private "transportation?" They own the joint. My guess is that the Lindens will continue to try to do what is best for "The Whole," as that will continue to be what is best for their bottom line. Which is great.

But let's think, for example, of what would happen if a majority (or a very vocal and wealthy minority) of SLitizens up and demanded that the Lindens do away with adult content in SL? That would kill off quite a few businesses, eh? But if the math was right for the business as a whole... the Lindens would be dumb not to do it.

It ain't a democracy. It ain't even a Republic. It's a venue. And you can get bounced, or they can change what's playing on the juke box at any moment. Maybe someday (soon?) we'll have a virtual world run as an Open Source government/collective from the ground-up. But for now, SL is a business, run by the owners. If you want to play (and "play" is the key word), you can. If you don't, go back to RL. Or play a different game. Nobody's forcing you to live a Second Life.


James Grimmelmann > If Linden were a state or local government in the United States, the owners of telehub land might bring a regulatory takings claim against it. The theory would be that Linden's actions amounted to a de facto elimination of the use that made ownership of the land valuable, so that Linden would owe just compensation to the landowners.

Again, analogies are difficult. Second Life is Second Life it’s not a state or a china shop. But as the law is based on what we have it might be worth looking at some different analogies to then see what the underlying principles are and see if they hold when we have the particulars of Second Life and the generalities of virtual etc etc.

So, let’s take some examples based on a shopping mall:

1/ Someone purchases retail space next to the entrance and big car park and pays more money for it than other retail spaces in the mall. Then the Mall decided to open a bigger entrance somewhere else or entrances next to every store - just business or basis for legal action?

2/ The mall is weird, you can only by goods in the mall using shiny blue tokens, the mall owner are the monopoly supplier of said tokens, and the mall says – given consumer protection token exchange types business would be really neat for the consumer. Someone also decides that there really is a neat meta-business in buying and selling tokens, they invest cash in accumulating tokens, marketing their token exchange program etc. Later the mall puts people at every entrance saying to shoppers – hey, wana buy some tokens direct from us? Fair competition?

3/ The mall says in its retail rental agreement: ‘sometime we need to clean up the mall, if we have to clean the mall you will loose all your stock’. The mall needs to clean up, the store owners loose their stock (if you want you can imagine that it’s a craft mall, that the material cost of the stock is negligible but each item has been lovingly crafted so has value derived from its labour input and the value that customers put on this).

Now if you think each of the examples above is fine i.e. they are tough - but business is a tough game; then, in respect of this kind of stuff, it’s hard to fault Linden just because Second Life is bright shiny and arguably utopian.


Peter Edelmann: I would have thought regulatory taking would be much more restrained to the negative consequences of government action . . . .

I should have been clearer that the reasons I gave the real-world equivalent wouldn't have been a taking weren't exclusive. There are plenty of others. But the concept isn't ridiculous.

The unsettling of people's expectations is the sort of thing that people have gotten upset about quite regularly. Indeed, this scenario is a bit reminiscent of the Charles River Bridge case, an old United States Supreme Court case from the early 1800s. The owners of the only bridge across the Charles River sued to prevent the Massachusetts legislature from allowing another bridge to be built. They claimed that they had a contractual right to a monopoly with which the state was interfering by allowing another bridge. The first bridge lost, 6-2. The policy questions implicated translate almost perfectly. Should the government be allowed to change its mind like that? Should it owe compensation to those who lose their monopolies as a result? Should those who benefit from the change have to pay those who lose? Should government create this sort of monopoly in the first place?

The "should" may sound a little off in the context of a virtual world. But don't think of the question as what a court would tell the Lindens to do or not do. Think of it as a conversation the Lindens have amongst themselves. They can debate which policies -- restraint, equality, compensation -- would be fair for the players. They can debate which policies will make players least angry. They can debate which policies will make Second Life most attractive to new players. They can debate which policies will be best for Linden Labs in the long run. In all of these debates, they'll have to come back to the same policy arguments that the lawyers for the two bridges dealt with.

The questions Ren asks, based on the shopping mall analogy, are interesting, too. Those questions take the external perspective seriously -- they ask how we as outsiders feel about allowing these kinds of systems to exist in our world. The issues I was getting at are a bit more internal. We take seriously the "world" part of "virtual world" and ask whether there are concepts from real life that translate over. I think the answer has to be "yes," that within that perspective, the same factors that make governments write just compensation clauses into their constitutions press on game companies. They may or may not come out in the same place as "real" governments do, but they have to go through some of the same kinds of balancing exercises.


I am savoring the delicious irony of Ren's analogy of a shopping mall owner moving the main entrance and thereby reducing traffic flow to the tenants who were near the original entrance. If the Lindens maintain that SL is equivalent to a shopping mall rather than a company town to avoid freedom of speech rights, then they are hoisted by their own petard when it comes to the property issue. SL can't be one thing for purposes of FOS and another when it comes to property rights, which is probably why the Lindens are offering buy-outs to the landowners. It is easier for them to fork over L$ rather than to cope with FOS.


Peter S. Jenkins >SL can't be one thing for purposes of FOS and another when it comes to property rights

Why not?

This gets to the heart of my argument in another thread about the issues of using analogies when talking about something like Second Life. As Second Life is Second Life and not a mall or a sate or a china shop or sand pit then if we do start to use angologies we have to take into account that Second Life will only be like a given thing to some degree for some purpose. So it might very well be the case that in the fame or anology the best you can do to explain / argue for what SL is and how it interfaces with law is to say:

In respect of issue / right X SL is lot like A and a bit like B and C
In respect of issue / right Y SL is lot like B and a bit like A and C


Ren> Now if you think each of the examples above is fine i.e. they are tough - but business is a tough game; then, in respect of this kind of stuff, it’s hard to fault Linden just because Second Life is bright shiny and arguably utopian.

However, if you go into business understanding the cost/risks associated with the business, then you build your business model to accomodate those risks.

If I knew there was a chance that my stock might be periodically "Swept away" then I would gear my business to profit from the circumstances as they were, or not do business there. I'd expect that the mall sites would be priced in a way that reflected that issue.

Much of the SL issue reflects the fact that users aren't necessarily fully cognizant of the "Virtual World" situation, so they apply real world models to it. Property location was valued using assumptions that they'd use in the real world (permanence) without looking at the lack of guarantees- and even the disclaimer against claims of permanance.

The property should have been valued at it's potential short-term benefit (the current "hub" situation) and not the long-term (permanence-based) value, which, based on the rules that govern that world, were not there.

Second Life would have been justified in auctioning the land at a slightly higher value based on the assumption that the user will get some short-term value from the property from the hub, even if that value is not permanent- it's still valuable.


James >The unsettling of people's expectations [...]
I agree - and the detrimental reliance aspect of the teleport hub issue could be a very real problem for LL, if the situation is as described by katykiwi Moonflower and the Herald. But this a contract issue - much like the majority characterized the Charles River Bridge case. Detrimental reliance is essentially saying there was an implicit contract/promise/representation made by a party who knew (or ought to have known) the other party would rely on it to their detriment. Selling hub land at a premium knowing the hubs would be wiped out sounds a lot like such a case. But setting that issue aside - were there reasonable expectations the hubs would last forever? I agree with you that it probably makes business sense for the Lindens to be as predictable as possible if they want residents to invest time and money in SL, but at what point does it become a legal obligation? At some point, the EULA is going to have at least some bearing on the matter, and LL is going to be able to say "Look, we told you from the beginning that we make the rules, and the rules can change at any time, etc. and you agreed to that when you joined."

James >Think of it as a conversation the Lindens have amongst themselves. They can debate which policies -- restraint, equality, compensation -- would be fair for the players.
Fair for the players - as citizens? as paying customers? There are fundamental differences between a business and government, and the two roles are not necessarily compatible. Which brings us back to Matt's comment earlier - that Linden Labs may be trying to have it both ways, but I'm also doubtful such an approach will fly. Mark Wallace has written a couple interesting pieces in The Escapist comparing Second Life to EVE - arguing that the hands off approach CCP is taking to in-world governance actually sets the stage for much more interesting emergent player governance and economic structures. CCP is running a business, and (except for policing the edges of the magic circle) has stayed (more or less) out of player governance. Linden Labs has taken a half-in half-out approach, usurping roles players had taken on themselves (eg. Gaming Open Market), and regulating in-world behaviour. Eventually, LL is going to have to decide if they want to govern a "country" (as Phillip is fond of calling SL), or run a business.

It's interesting that the company town cases generally deal with towns run by companies incidental to their main business (eg. mining) - and that when companies run towns as a business (eg. Disney's "Celebration"), the citizens tend to oversee the governance structures (eg. electing the mayor, etc.). There are some fundamental problems with trying to take on the governance role. Second Life is a private enterprise, and in the end Linden Labs will make decisions that are in Linden Labs' (and their investor's) best (financial) interests. Perhaps this currently means creating an environment that is friendly to the content creators who are to be the major draw of new residents (and thus revenue) to the company. That model could change, and the entire project has been set up in such a way that it could change radically and residents will be able to do very little about it [or so LL's legal counsel would hope at any rate]. You play in their private playground, you play (more or less) by their rules - they write the constitution and amend it at will - and the "constitution" spends a whole lot more time defining LL's rights than enumerating resident rights. That's pretty standard for most EULAs and contracts of adhesion - these are documents meant to define and protect private business interests - not create societal governance structures.

The reason the legislature and the executive, on the other hand, are granted so much leeway by courts is that their decisions are presumed to reflect the wishes of a majority of citizens, and not the private interests of the legislators. When a government makes a decision to build a bridge or shut down a subway it is assumed to be an overall benefit to society. When Linden Labs shuts down teleport hubs or creates their own money exchange, there is little reason to presume the decision is in the interests of its (current) residents. SOE's recent changes to SWG are a case in point - the changes were made in spite of the wishes of the existing residents, in the hopes of attracting new players. The loss of existing players and community structures was collateral damage - and at least partly foreseen. It was a business decision made by a private corporation looking out for its bottom line. In the end, I think Phillip is going to need to decide if he wants to be a private actor or a self-appointed government in his "country". If the former, then LL should maybe think about handing over the reigns of power to residents - if the latter, then maybe Phillip needs to leave LL and form an independent non-profit with the sole purpose of maintaining the benevolent dictatorship of SL. The other route is to simply recognize that SL isn't any more a "country" than Azeroth, and ought to be treated like any other mall, game or online marketplace.


I just want to comment on the total lack of business acumen these SL players are diplaying when they fault SL for strengthening business opportunities in the SL economy with a technological innovation that is the equivelent of ecommerce in the SL world. Just as ecommerce in RL makes it possible for a tiny shop in Ireland to effectively market and sell to a global customer base, p2p travel in SL improves the commercial prospects for *all* businesses in SL. For a bunch of people claiming their complaints rest in business losses, the simplification of shopping and navigating to their businesses seems lost on them. When I fly from a teleport I am looking for my destination and impatient to get *there* which kind of makes me unreceptive to everyone's noisy, ugly billboards and shop ads in the sky. A good businessperson will embrace new opportunities in the market, adapt, and thrive. A poor one will whine that "times changed" and be unable to adapt to the new market and die out. I don't see an incredible difference between what happened with the LL here and what the US government already does (ie builds major highway systems, which temporarily raises the value of the land by these systems only *until* more development results in alternate access to the regions formerly reliant on the highway system alone; expansion and infrastructure improvements in any physical place are *always planned ahead* and should be *assumed* by anyone with half a mind to progress).

Also, the fact that Phillip Linden is always being personally attacked shows a typical childish tendency for people to make the "boss" the bad guy when really he has done nothing (in this case) but try to navigate a very tricky path of progress that inevitably will temporarily "nerf" some people while making the entire world of SL better for ALL people. Gee, what a "dictator" he is. ;p

If anyone really believes LL did all of this in this manner to mislead land purchasers for their L$ (that the Lindens *issue* for god's sake) then I suggest they calm down and consider all the brilliant moves LL has made with SL and wonder if maybe, just maybe, they are misinterpreting what was simply a difficult new feature to roll out given how everyone assumed the best thing for their business was to be as close to a big, frustrating, inconvenient red beam as possible. Those people should read up on political economies. LL made a good decision for the future of the game by implementing p2p, imo.


Heh, also one reason we didn't want land very near a hub is that the lag can get very bad in such areas- decreasing traffic and congestion that need not be localized to one arbitrary "hub" part of a sim is yet another benefit for all the citizens of SL, present and future. I think that from a game design perspective, it's *really* hard to defend the telehub system as anything but a step toward p2p navigation- it has so many relative faults. Maybe I'm the only one who feels that way?


Another way to look at this P2P change is as a new technology.

As I mentioned in Economic Stages of MMOGs, new technologies and organizations forms (particularly in energy production, transportation, and communication) tend to be economically and socially disruptive. The introduction of railroads and automobiles utterly eliminated the horse-drawn coach industry -- should this displacement of many workers have caused steam engines to be banned?

There's a parallel here in something that happened in SWG. For a long time, to find out what a private merchant offered for sale on their personal vendors, you had to actually travel to those vendors to examine their wares. Then the public Bazaar terminals were enhanced to show all goods on all terminals and vendors (if the vendor owners elected to have their goods shown publicly).

This generated a lot of controversy among Merchants. The high-end competitive sellers didn't like this change because it let everyone see whose prices were lowest for any item. On the other hand, buyers loved the change because it allowed them to reduce their costs, which IMO ultimately meant that Merchants overall did more business.

This change, I think, wound up benefitting all of SWG's players. But there's no question that in one click of a download button it disadvantaged many of SWG's most active economic players. So does that mean SOE was right to suddenly impose this new feature, or wrong?

Something to consider is that most real-world technological shifts don't happen overnight as part of a downloaded patch. They tend to take years to see wide usage, giving people in old technologies time to shift to something else (or exit the economy completely). Even so, these tech-driven dislocations have usually been painful, but they'd have been far worse had they occurred as abruptly as P2P can be turned on. What if P2P had been introduced in a more gradual series of changes? Would that have gone down any easier with most of SL's subscribers?

I also wonder about the "worldy-ness" value of instantly zipping to wherever you want to go. Is it more convenient to just *bing* and you're there? Absolutely... but I wonder whether something useful is lost when one path is no longer any longer or shorter than another. Where's the value of Frost's "path less traveled" when getting from A to B as quickly as possible is what's rewarded? Why have topography when you no longer need it?

Topography tends to channel people into routes. That has advantages and disadvantages. Ships and caravans on a known track can be more easily located by pirates and bandits. And MMOGs that funnel too many people through one point can become laggy. (This happened in SWG before player starships. Every interplanetary traveller had to go through Corellia, leading Coronet Starport to become a major league lagfest.)

On the other hand, when your car breaks down late at night, you're more likely to find help if you're on the autobahn than if you're negotiating a one-lane track. Routes are good for socialization; you bump into more people. And they're good for the economy, too -- traders go where the buyers are likely to be. (But see "lag" above.)

So overall I'm torn on what's happening in SL. New capabilities that disrupt established patterns are inevitable (and possibly even desirable)... but the problems of letting everyone teleport anywhere, anytime are also well known.

Maybe those problems matter less in SL than they would in a more "game-y" virtual world. I guess we'll have to see.



Elle: katywiki and others among us knew that the Lindens had p2p already pre-existing as a coded feature, which they had removed in an earlier version, but kept for themselves among their god-powers. But they added significant features to enhance the p2p in the new context of a much larger world with many more residents.

They removed the drop-down list of sims because it simply got too long and devoured too many resources, they said. Now you have to know the name of the sim and type it in.

They also improved the map significantly, making it far more detailed so that it showed builds on it, and had layers of information -- they put the land-for-sale price tags which used to be in a back tab on to the front of the map. So all of that was coding.

The clairvoyant might have been able to tell that with this enhanced new map feature and the remove of the pull-down list, the Lindens were "up to something". These map feature changes came before the p2p announcement, in the summer, after GOM was killed off. BTW, they also later added the ability to put the map as a feed on a third-party website.

As early as May, wise barons began to sell off telehubs at the mere hint of Lindens discussing p2p. Saying they just "restored an earlier feature" is misleading because it's a feature with enhanced *new* features like the map to prevent you from p2ping into a wall (it used to be a lot smaller and more easily-remembered and navigable world).

Robin Linden also appeared on the forums August 29 saying that the Lindens realized that telehub mall owners would experience losses and they would have to contemplate compensation and how not to harm business.

Citing Robin's odd figures as any kind of proof of the "fakeness" or "death" of telehubs just doesn't work -- think for yourself. Her figures don't make sense, and are presented in a misleading fashion, merely to make the case for p2p.

She's added in ALL the 1000-odd sims to the mix. She's contrasted sales and traffic at 48 telehubs sims with 950 other sims. Silly! Of course when you contrast 48 sims against 950, there will be more sales and traffic outside of hubs, because of casinos, clubs, escorts, residences etc. on the other 950. The thing to do would be to contrast 48 telehubs sims with 48 sims in the boonies where there were various FIC boutiques. This is what I kept urging them to do. They couldn't for political reasons. We did hear from Philip, however, a frank recognition that sales at hubs were simply 50 percent higher. He could say that sales were 50 percent higher (he loves to pour over statistics) because he didn't falsely contrast them with 950 other sims and flatten out the numbers; he looked at the other sims where there were stores.)

And those of us who owned the hubland knew that -- obviously they had value and that's why they were bid up.

There's also the issue, overlooked, of how prior to June 2005, on the old-format auctions with whole or part sims, the Lindens marked a sim as telehub, and *themselves* opened up the bid at a higher level than for non-telehub sims, and then of course accepted higher bids up to $10/meter or more. So there is proof positive that they themselves recognized its higher value, and sold it at a higher price, leaving aside the issue of resident speculation.

The misrepresentation issue is key. People bought these sims right up to the last minute when p2p was announced, and even afterwords -- not everyone reads forums announcements obviously. So the "bait-and-switch" reasoning of angry land barons stuck.

It's important to remember that the class of people who benefited from this buy back in Linden dollars (not US dollars) is small. Most of Anshe Chung's sims were purchased before August 1. I didn't have any purchased after August 1. I've personally only found 3 people who are going to apply and benefit from this buyback, and they aren't the big barons. Perhaps 12-20 residents may apply. It's not the huge dent in the economy with inflationary flushes of guilt play money that the forums royals would have you believe. The increased number and amount of the Developers' Awards might arguably be a better target for those concerned about inflation -- but then the Lindens will phase those out by March 2006.

Linden Lab does not have liability for litigation in any other area that I can see -- the TOS covers changes to the software, changes in experience, changes in content, etc.

They limited their liability to litigation by doing the right thing by those who purchased telehubs long after their internal discussion and coding and preparation began to install p2p and remove the telehubs.

Those screaming now about forming unions and suing the Lindens for their lost content due to a bug and a flawed vendor are just posturing at a moment when they can in the usual ongoing class warfare in SL between content-makers and land-dealers.

The windfall beneficiaries of the move to p2p are the content-makers -- the oldbies who tended to have stores on old sims, far from telehubs (telehubs were their main competitiors, which is why they loathed them, among many other reasons any of us didn't like them).

Their sales have increased dramatically since p2p. They should not begrudge a handful of landowners, mainly NOT the land barons they despite, in getting a buyback of land they bought in good faith.

The sad thing to me is that the removal of the telehubs pruned back an important and growing middle class. When the major barons Anshe Chung and Blue Burke sold off a huge chunk of their hub holdings in May (with the first discussage/leakage of info about the p2p coming), there were many of us that bought this now cheaper land. We put in single stores or tenants, and charged less prices. Many people with just one or two stores finally got a chance to break through the barrier that had existed with these hugely high costs at hubs that were artificially maintained and privileged only a few.

When the Lindens killed off the hubs, they didn't kill the top land barons, they killed off those mom and pop store owners, most of whom were forced to close their shops, sell their land at a loss, even leave SL. Only a few of these people are eligible for the buyback.


Peter Edelmann: re: "In the end, I think Phillip is going to need to decide if he wants to be a private actor or a self-appointed government in his "country"."

That sums it up. Or box it up and sell the mass entertainment part to Sony, and keep the educational part for Linden Research. Or assign his already-existing overlord class of mentors, hired programmers, residents-turned-Lindens, etc to rule the world in his stead.

When you write "Perhaps this currently means creating an environment that is friendly to the content creators who are to be the major draw of new residents (and thus revenue) to the company" -- I could explain how the notion of "content" could be fine-tuned. That is, content is objects and scripts and such, but it is also services and land development and other "non-inventoriable content" as I call it.

You should be mindful that it is precisely *inventoriable content creators* i.e. content such as clothing, vehicles, animations, poses, etc. that is most favoured by SL (along with its creators) and best served by p2p and the removal of telehubs (formerly a forced traffic for store-owners and a boon to land dealers).

And distinct from the conten-creators who rented or bought from them, telehub land owners who suffered a loss are those that LL, in its company model, can most afford to lose. That is, land owners who buy, parcel, develop land are needed to pay tier, and the monthly land fee are a significant part of LL's revenue.

But they are expendible. They aren't really unique. Inventoriable content creators get protection of their copyright. Land-owners have less protections for the stability of the product they buy and sell.

As a Linden once told me, when I protested at the infestation of the extortionist land-sale "Impeach Bush" signs everywhere (which the Lindens have ruled must stay in the interest or protecting creativity, ad space, freedom of speech, etc.): "There's always another guy to buy the island. Can I help you tier down?"

It often strikes me that Philip, in part having to do his day job as the game company CEO, and his night role as king of a world, has to keep doing a Cat-in-the-Hat type balancing act among classes and interests: what develops the platform vs. what makes avatars stick. He can't let any one group take over -- at least not yet. He tends to keep them off balance, like any authoritarian dictator must to survive.

The avowed goal of LL now is to get content, content, content to keep drawing in subscribers. They have 100,000 subscribers now, but of these, only a relatively small number are premium account landowners of more than the free 512. That figure hasn't grown as substantially. Thus there are numerous free basic accounts being encouraged to buy Lindens, or at least survive on their free $50 LL stipend, and buy, buy, buy content. Content sales soared after p2p was put in. The idea is that dressing avatars, clubbing, driving in vehicles etc will keep the subscriptions pouring in.
This formula has worked so far.

But in order to make a world as distinct from a game, you need to have land and a private land-holding class that emerges as a bulwark against the state and its overreach. That's in the world's long-term interest. And you need land to put all that content on. Sooner or later, people stop flying around to clubs dressed up in their bling, and they buy land, set up homes, get married, nest, even have babies. This civilizing is a stabilizing factor for the world; it is scorned by the content-creation class and revolutionary platform programmers as "bourgeois" and "like RL" etc.

While professors may laugh at this kind of detailed versimilitude, I'm standing in a store on an island right now looking at a miniature pixel bottle of Pedialyte you can buy in SL, and instructions for "how to get pregnant" and buy a series of changing shapes for your avatar over 6 weeks, culminating in a little NPC baby that cries and needs feeding. People do live like this online and you really can't afford to laugh at them because *this is where they spend their time and money*.

While people need content and ever-changing content, like any world or country, they need stability and not just endless revolution as well. They need to know when they wake up in the morning the world will still be there without basic infrastructure like transportation or banking changing drastically as it has in SL for the last 6 months, causing losses for many.


Kelly Rued > the fact that Phillip Linden is always being personally attacked shows a typical childish tendency for people to make the "boss" the bad guy when really he has done nothing (in this case) but try to navigate

Just to be clear - I have very little vested interest in Second Life or the decisions made there. My comments were in no way an opinion on whether or not P2P is a good idea for SL - it may well be. I don't know whether or not commenting on Phillip Rosedale's management of Second Life is a "childish tendency", but he is a very public figure at the head of a privately held company running a high profile virtual world. I hold no grudge against Phillip or any of the Linden Labs gang - I've met several of them, and have great respect for their project, and for them as people. If I focus on Phillip and his public statements, it is because he presents a concrete example of virtual world governance, and more to the point, the virtual world which was the topic of this thread. My sincere apologies if my comments were taken any other way.

> while making the entire world of SL better for ALL people. Gee, what a "dictator" he is.

Is this not the very definition of "benevolent dictator"? At any rate, as I've already mentioned, my comments were not an opinion on whether P2P is or is not in the interests of Second Life as a world, or the interests of its residents. I was simply saying that if a court were to look at such decisions, there is little reason to *presume* it is in anyone's ultimate interest but Linden Labs'. That is different from the *presumptions* courts generally make about government decsisions. Whether or not such presumptions could be overcome with evidence to the contrary is a matter that would have to be dealt with in the specifics of individual cases.


Ren > In respect of issue / right X SL is lot like A and a bit like B and C
In respect of issue / right Y SL is lot like B and a bit like A and C

I don't dispute that, in general terms, different analogies can be used for different legal concepts, e.g. the "marketplace of ideas" analogy for FOS and the "bundle of sticks" one for property rights are commonly used analogies in U.S. constitutional law. However, in the SL example, the analogy of the company town, which is predicated on the role of the Lindens as stepping into the shoes of the state is fundamentally inconsistent with the shopping mall analogy, which is based on the Lindens running a privately owned business. This inconsistency cuts across the issues of FOS and property rights. For example, the Gulf Shipbuilding Corp., the company that owned Chickasaw, the company town in the famous Marsh case, would probably have been able to successfully raise the same arguments as a municipal government would if the store-owners on the main street objected to the creation of a municipal bus route on a different street.


>Where's the value of Frost's "path less traveled" when >getting from A to B as quickly as possible is what's >rewarded?

A much misinterpreted poem- the point WAS that few people, not even Frost, took the road less traveled. ;p There is no point in romanticizing inconvenience or hardship as a "scenic route" when people want/need to get where they are going. I guess they should have got rid of teleporting altogether (no land owners would have the hub advantage and everyone would have to take the long way unless they're going Home).

And with Peter, I have little vested interest in SL (I'm a player there but I see it as a game world owned by LL, not some imaginary country where I have citizenship privs and Phillip is my dictator, benevolent or otherwise). For some people the magic circle of being an SL "land owner" (you do not OWN LAND you RENT SERVER SPACE) seems to be a bit out of whack with the real value and legal status of their investment. If the slight devaluing of losing a telehub is enough to put someone out of business, force the resale of the land, and drive them from the game (! this means not having enough cashflow to pay $5/month for basic player fees) then you, as a make-believe "business tycoon" need to brush up on biz management (pay particular attention to the part about undercapitalization- if someone uses SL as a get rich scheme and puts in more than they can afford and gets burned, there's no one to blame for that). Telehub or not, this comes down to the notion that if you're running a business, your operating environment, competition, etc. is always in flux and you need to adapt or die out. That is what running a business entails.

It's hard for me to fault Phillip Linden for operating in SL's best financial interests as that is his legal obligation to LL shareholders (especially when the controversial action benefits the entire player base equally, with only a slight nerf for a small few- including self-made celebrity SL types who really need to realize stop and think where their "empire" will be if SL just ups and closes down- they have zero obligation to give the community their software and good luck creating your own "player run" SL grid- it's a lot harder than using SL tools to make some virtual pants).

As CEO, acting in anyone else's interests is a serious breach of contract (and I think there are laws against it under certain circumstances). His job is to make LL profitable... and yet there will be people to fault someone for doing their job well (this is why I called it "childish" in that I don't see the critics putting themselves in his shoes as a designer/publisher and saying "well, this technology *would* improve SL overall, and for whatever reason we need to deploy it now but how can we do this fairly?"). I'm not seeing critics explain how it could have been handled better- all complaints with no solutions offered. If SL were your game how would you handle introducing p2p (or are people actually arguing that the hubs were superior for social/non-commercial travels and commerce-specific travels)?

Maybe I am missing the legal faux pas because I haven't read a good explanation of how laws pertaining to the transfer of title in real world property have any relavance to renting virtual bits on a privately-held corporation's hard disk. Land in SL is only metaphorically "land" to me. It's the equivalent of sever space for my web site with the web host, in real world legal terms afaik. Yet to hear the SL citizen legal threats you would think they actually own "land" covered by real world property laws.


Kelly Ruel >As CEO, acting in anyone else's interests is a serious breach of contract
Linden Labs not being a publicly traded company (AFAIK), I have no idea what Phillip's legal obligations are to his investors/shareholders - but I would imagine you are probably right. That is what makes Linden Labs different from a government, ergo my comment to James on the applicability of legal doctrines such as regulatory taking.

I see it as a game world owned by LL, not some imaginary country
My comments were precisely pointing out the problems with the country analogy in Second Life. But this is *Phillip's* analogy, not mine. If I'm not mistaken, he used it again in the recent BBC piece. If that is his vision for Second Life, some of the internal contradictions I pointed out earlier will undoubtedly need to be resolved at some point. Otherwise, as I said, "SL isn't any more a 'country' than Azeroth" which was my (perhaps convoluted) way of comparing it to World of Warcraft.

people to fault someone for doing their job well (this is why I called it "childish" [...] I'm not seeing critics explain how it could have been handled better- all complaints with no solutions offered.
I do not "fault" Phillip or anyone else for their choices (although I may disagree with them) - this is new territory ("Terra Nova") for all of us. That is why it is important to discuss the underlying issues in order for us to even have the tools to work towards adequate solutions. And while practical solutions may well come out of our discussions, it is not the primary purpose of my own engagement. If Linden Labs would like to hire me to come up with solutions to their problems, my contact info is at the bottom of the post.

I haven't read a good explanation of how laws pertaining to the transfer of title in real world property have any relavance to renting virtual bits on a privately-held corporation's hard disk.
I happen to agree with you, although I'm not sure it's for the same reasons. While I can't recommend any good explanations of why we ought to recognize virtual "property rights" across the board - the following poor explanations by Terra Novans are very well written and often insightful: Dan Hunter and Gregory Lastowka "Virtual Property"; Joshua Fairfield "Virtual Property". Richard Bartle has also written an interesting piece from a non-lawyer's perspective which outlines many of the arguments against recognizing virtual property. I agree with many of Richard's points and think the law pieces cited above fail to address some of them adequately. In particular, from a legal perspective I think one of the primary issues that Dan and Greg failed to deal with coherently is that of the EULAs. Joshua tries to get around the EULA with an argument based (in part) on real estate law, which I have argued is less than convincing. However, as I've said before, I do think we could envision a virtual world which was set up to create something approximating property rights.
Setting aside the intellectual "property" issues (which have little to do with the kind of property we are discussing), I agree with you that the Second Life EULA probably does not create any kind of actionable right with respect to virtual property. However, the rhetoric from Linden Labs both in their marketing and in pieces by Cory Ondrejka like this or this would seem to indicate that at least some people at LL take the idea of virtual property seriously. I wonder how far Linden Labs will be able to push the disconnect between their rhetoric/marketing and the terms of the contract. There will come a point where a court is going to start importing their representations and actions into their contractual obligations to the users who choose to "invest" money in "land", "businesses" or "property" in Second Life. In the end, Linden Labs will need to decide if they want to take virtual property rights seriously, as Cory has argued they should. If so, the decision ought to be integrated into the contractual arrangement with residents so that everyone is clear on their rights and obligations. If not, they may want to be careful that they aren't encouraging residents to believe the hype, or the hype may well become a legal reality.


Aargh, Typepad preview ate my post. Short version:

Back in the summer, SL telehubs seemed to be bit by the same disease that hit ATITD civic centers and I've heard reported for UO and SWG player-controlled towns: people build buildings. People quit the game. The buildings hang around, not very useful but not getting torn down.

My anecdotal observations were that I never saw an interesting store in a telehub - just lots of derivative malls selling the same kind of thing - and when I spent hours watching the maps I rarely saw people loitering in telehubs. They'd become a place to go through.

In the real world, we expect rents to drive out unproductive businesses in desirable locations. So as a noneconomist I'd say telehub land should just have been pricier.


Tom, some telehubs were ghost towns, especially starting around May-June when the word about p2p got around, but many had huge traffic on them -- which was why people rented from them -- they got sales from them. Lots more sales. Which is why they were coveted. And indeed very expensive, with the cost per meter of the land reaching $50/meter right before p2p, as some barons like Anshe Chung charged for what they would anticipate in rent had they sold it. It ran at $10/meter for a long time, double what the rest of land in SL sells for at an average.

It's not that people built the buildings and left. It's more like people built the buildings and tended to them, but the people who made the content in the vendors tended not to wait on customers, but just left the vendors out to ka-ching sales all day, and logged on every few weeks to cash out -- the ease with which you could just keep magnetizing avatars and their dollars was too temping. Failing to have ingame presence or even instore presence took its tool, however.

It's very important in doing economic analysis of a virtual world like this to put aside or lift any kind of cultural norms of taste themselves derived from high-brown culture. Malls in RL and in SL are low-brow or middle-brow. Intellectuals scorn them as they do Wal-Mart. But it would be silly then to think they are uninteresting economically. Thousands flock to them, shop, and they move the economy that way. The people who shopped in SL malls didn't think they were derivative -- there were various reasons to repeat anchor stores that were like the equivalent to the Gap or Barns & Nobles -- given how transportation and visibility for marketing worked. p2p changed that and made the idea of satellite stores less rational -- although I see not everyone has dumped them -- they go by their sales. Their sales determine everything. If people do not have sales, they do not rent. They had them, so they kept the telehub malls alive, and even continue to keep them alive post-telehub for that simple reason.


Re: "Regarding the devaluation of the currency in order to pay to compensate the landowners: it isn't so simple as just transferring wealth from the other players to the compensated land-owners. As a result of the new transport-anywhere system, it seems to me that the total value of all goods in the world decreased as well. The value of the property that was once near the teleporters has decreased in an absolute way: there is now less wealth in Second Life, period. Devaluing the currency seems to be a way to distribute this loss of wealth among the entire economy rather than placing it purely in the hands of the landowners affected."

But none of this is true. Look at the daily reports of US-dollar-denominated transactions. Prior to p2p, this ran at around $40,000 to $50,000 US many days -- it was usually around $40,000, even with only 4500 or so longed in at any one time.

Today, it is at a whopping $249,000 US as I speak. And it has been routinely $149,000 or more every day since p2p, with still the same number of log-ins roughly concurrently.

There is a HUGE and DRAMATIC increase in sales of content due to the map-happy factor of everyone jumping around with ease, and content creators now galvanized to update vendors, put out more content, have more events, etc. due to the new ease of travel.

This may die down; it's a factor now that means there isn't (yet) a drop of inworld value of goods and services.

Land is dropping,however, tho it's too early to see how that will pan out. The Lindens appear to artificially maintain it at $5.5/meter often despite claims of an "on-demand" auction working only when there is actual demand/need for land.

Telehub land lost its value in some places; in others it still sells for $10/meter. It's too early to see if there is a massive, across-the-board devaluation. Some malls appear to have kept their character, traffic, and sales intact mainly because their stores are all in FIND and CLASSIFIED and that means people just p2p to them.

I do want to repeat that the class of those able to take advantage of this compensation offer is very small. It is only those who bought telehub land AFTER August 1. Anshe Chung, and many others, including myself, bought BEFORE. So there is a handful of people, and the aggregate of even the funny-money payout to them is no factor of significance in "inflation" despite the hysteria you read on the forums.

The increase in developer awards last month would be similar, or even a greater factor (due to the camp chairs) in causing inflation.

More analysis is needed to understand why the huge increase in sales, the drop in land costs, the increase in population, still spells a 25 point decrease in the Linden/dollar value, from what it was in the GOM heyday. It went up near $4.00 US/1000 LL briefly when the LindEX started, then sunk as barons cashed out over telehubs, but then kept sinking.

This is where I look to someone like Edward Castronova to explain our world.


also depends on how value is measured of course, but re: "the total value of all goods in the world" -- many people raised their prices not only expecting more of a windfall but due to the Linden/dollar ratio drop.


I believe the Lindens (in this case) were only doing what they thought was best, in the long run, for the SLers and the world in general. I was very suprised that LL caved and decided to give land owners a settlement if they wished it. A majority of SL is based off of information and basic rules for RL. In RL if you put up a donut shop because the city ran a police station next door, then the city decided to relocate the police station, do you think they would compensate you? I know the situation is far from ideal for MANY land and business owners in SL. While it makes for a short term difficulty when it comes down to it, it is THEIR servers, initial basic creation and decision to make. No, I don't like it either, but everywhere has to have some sort of decision makers (the call it government for a reason) or anarchy will ensue. You just can't possibly make 100,000 people all happy when making a change of that magnitude. I read an article in the Metaverse Messenger that reminds you of that scene in "Bruce Almighty" where Jim Carrey is god and just hits "yes to all" on his "Yahweh" e-mail. Still most of the people wound up unhappy about something. You can't give all of the people what they want all of the time. Like it or not....

The comments to this entry are closed.